Economic Performance, 2006

In the Spring European Council of 2000 the European Union decided the Lisbon Strategy. This strategy was aimed at making Europe the world´s leading knowledge-economy by 2010.

In the meanwhile the global economic recession, has made responses to Europe´s major challenges – globalisation, climate change and an ageing population – even more urgent. The EU is currently discussing a new strategy for the period beyond 2010, the so called Europe 2020 Strategy, a successor to the Lisbon Strategy. This new common agenda should help the EU to recover from the crisis and to move the EU into a more sustainable, greener and more innovative economy where knowledge will be the key input.

In any case, the strategy for 2010 remains also important and the monitoring of related indicators is as essential as ever. This ESPON ‘Map of the Month’ focuses on the regional diversity in Europe in the light of a combined indicator with a clear economic focus related to the Lisbon/Europe 2020 Strategy.

Please note that the latest data available display the situation in 2006. Consequently, this map does not reflect effects of the recent global economic downturn.

Concept/Method/Measurement

The composite indicator analysed is based on 7 of the 14 indicators of the Lisbon agenda short list of structural indicators defined by the European Commission in 2004 that can be regionalised. These indicators are: Gross Domestic Product per capita; Gross Domestic Product per employed person; Employment rate; Employment rate of older workers; Gross domestic expenditure on research and development (GERD), Dispersion of regional (un)employment rates and Long-term unemployment rate.

The methodology for creating the composite indicator is the following: For each of the seven indicators, all regions are ranked and divided into quartiles. This implies classifying regions as belonging to the best 25% of regions, the second best 25%, the third best 25% and the fourth best 25%. For each region, these quartile positions are added up and divided by seven (total number of indicators considered), for each region thus resulting in an average quartile position for the region related to these seven indicators.
This quartile position varies from 1 (representing the highest performance with all indicators in the best quartile) to a 4 (lowest performance in which all indicators are in the worst quartile).
This method gives equal weight to all seven indicators, allows for an easy comparison of changes over time and also downplays the role of regions performing extremely well or bad for one or a few of the indicators analysed.

Observations

At European level, a West – East dichotomy can be identified in 2006, where the composite Lisbon performance is substantially worse in regions in Eastern Europe. The primary exceptions to this spatial pattern consist of regions in Portugal, Spain and Southern Italy. In Eastern Europe, exceptions are the capital cites, in particular Prague (ahead of Brussels and Vienna), Ljubljana, Bratislava and Budapest.

The second noticeable territorial observation is a North vs. South divide, where Northern European regions show a much better situation than regions in the South.

Another important spatial pattern is the traditional core-periphery polarisation. This territorial pattern is present both at European and national levels. In the European context, central regions in Europe are in a more favourable position than peripheral regions. The Nordic countries are an exception to this situation as they reveal a high performance in the composite indicator analysed. At national level, the capital city regions in Europe are favourable regions in terms of competitiveness capabilities and reveal high disparities in relation to other regions within the same country. Exceptions can be found in London, Brussels and Bern.

In addition to the wider European picture, a series of national pictures also emerge. In this respect, while most countries in Eastern Europe despite their low performance, exhibit little or no regional disparities, other such as Italy, Germany, France and Spain show rather large differences amongst regions.

Conclusion

When regionalised, the composite index on the Lisbon economic performance highlights a considerable regional diversity, which implicitly means that various development strategies have to be considered based on the inherent profiles and potentials of the various European regions.

The territorial pattern of Lisbon performance clearly corresponds to the pattern of major urban areas and accessibility. In practical terms, it appears that regions with good Lisbon performance tend to have important urban agglomerations and good accessibility. This also underlines disparities within many countries between capital regions and the rest of the country.

However, caution is needed when interpreting territorial patterns based on this composite indicator as it concentrates heavily on measuring the economic level. In particular one should keep in mind that the new EUROPE 2020 Strategy includes also other key drivers, such as knowledge and energy efficiency, that can help boosting Europe´s competitiveness.